Correlation Between MELIA HOTELS and CHINA TELECOM
Can any of the company-specific risk be diversified away by investing in both MELIA HOTELS and CHINA TELECOM at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining MELIA HOTELS and CHINA TELECOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MELIA HOTELS and CHINA TELECOM H , you can compare the effects of market volatilities on MELIA HOTELS and CHINA TELECOM and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in MELIA HOTELS with a short position of CHINA TELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of MELIA HOTELS and CHINA TELECOM.
Diversification Opportunities for MELIA HOTELS and CHINA TELECOM
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MELIA and CHINA is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding MELIA HOTELS and CHINA TELECOM H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA TELECOM H and MELIA HOTELS is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on MELIA HOTELS are associated (or correlated) with CHINA TELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA TELECOM H has no effect on the direction of MELIA HOTELS i.e., MELIA HOTELS and CHINA TELECOM go up and down completely randomly.
Pair Corralation between MELIA HOTELS and CHINA TELECOM
If you would invest 675.00 in MELIA HOTELS on September 24, 2024 and sell it today you would earn a total of 58.00 from holding MELIA HOTELS or generate 8.59% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
MELIA HOTELS vs. CHINA TELECOM H
Performance |
Timeline |
MELIA HOTELS |
CHINA TELECOM H |
MELIA HOTELS and CHINA TELECOM Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MELIA HOTELS and CHINA TELECOM
The main advantage of trading using opposite MELIA HOTELS and CHINA TELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MELIA HOTELS position performs unexpectedly, CHINA TELECOM can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CHINA TELECOM will offset losses from the drop in CHINA TELECOM's long position.MELIA HOTELS vs. Check Point Software | MELIA HOTELS vs. ITALIAN WINE BRANDS | MELIA HOTELS vs. Alfa Financial Software | MELIA HOTELS vs. CPU SOFTWAREHOUSE |
CHINA TELECOM vs. PUBLIC STORAGE PRFO | CHINA TELECOM vs. TERADATA | CHINA TELECOM vs. MICRONIC MYDATA | CHINA TELECOM vs. INFORMATION SVC GRP |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Transaction History module to view history of all your transactions and understand their impact on performance.
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